Rollback of corporate tax reductions: November 24, 2003.

• Position: Canada

On November 24, 2003, the Toronto Chapter of Tax Executives Institute sent the following letter to Minister of Finance Greg Sorbara in reaction to the announcement of the intention to rollback corporate income taxes to 2001 levels. The comments were prepared by the Toronto Chapter, whose president is John M. Allinotte of Dofasco Inc.

On behalf of Tax Executives Institute (TEI), I am writing to express TEI's disappointment with the announced intention to legislate a rollback of corporate income taxes to 2001 levels. TEI is also concerned about the new government's statement that it will maintain other corporate taxes, including potentially the Ontario capital tax, at today's rates.

Background

Tax Executives Institute is the pre-eminent association of business tax executives. The Institute's 5,400 professionals manage the tax affairs of 2,800 of the leading companies in Canada, the United States, and Europe and must contend daily with Canada's business tax laws. The comments set forth in this letter reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency who constitute 10 percent of TEI's membership. TEI is concerned with issues of tax policy and administration to our common benefit. We are convinced that the administration of the tax laws in accordance with the highest standards of professional competence and integrity, as well as an atmosphere of mutual trust and confidence between business and government will promote the efficient and equitable operation of the tax system. TEI has over the years established a good working relationship with officials of the Ministry of Finance.

The November 20, 2003, Speech from the Throne confirmed previous announcements from the Ontario government of its intent to introduce legislation rolling back the general corporate tax rate reductions legislated by the previous government. Such legislation will increase the current corporate income tax rate from 12.5 percent to 14 percent for most taxpayers, and from 11 percent to 12 percent for manufacturers and processors. Moreover, since the phased future reductions of the corporate income tax rate will not be implemented, the effective Ontario income tax rate for 2006 will be increased from the previously scheduled 8 percent to 14 percent.

As an additional matter, Premier McGuinty's letter of September 16, 2003, to the Chief Election Officer said that the new government would "maintain all existing other corporate...